Hassan Romani, Senior Investment Analyst, Europe, Central Asia & MENA
With the pandemic hitting the Middle East in the first quarter of 2020, Jordan was one of the first countries to swiftly implement strict travel restrictions and to introduce both full and partial lockdowns. While these measures affected the entire economy, small businesses were the most vulnerable. Some 97% of enterprises in Jordan are micro-, small and medium enterprises (MSMEs) and they employ more than 70% of the country’s labor force.
Most MSMEs are in the informal economy and have limited access to finance as they lack credit history, which is a prerequisite for banks. Therefore, microfinance institutions (MFIs) play an important role in supporting small businesses. This has been especially true during the COVID-19 pandemic as most microentrepreneurs have faced liquidity issues.
MicroFund for Women (MFW), the largest MFI in Jordan (700 employees, USD 75 million loan portfolio), offered a two-month deferral to its 139,112 clients at the beginning of the pandemic and has been proposing tailored financing solutions. It also continues to support marginalized clients by providing a wide range of financial and non-financial services.
During the pandemic, MFIs have faced many challenges, including restrictions on working hours, drop-in collections and limited liquidity buffers. While lockdown measures have interrupted the collection of repayments via their branches, MFW’s clients have continued to have stable access to the MFI’s services thanks to its efforts to digitalize the client experience before the outbreak. Through the MFW mobile application, clients can access their accounts, use their e-wallets to receive loans, and pay instalments without visiting branches. This has been a strong advantage for MFW; yet it is by far not the reality of all MFIs in the region.
MFW has been supporting women entrepreneurs (96% of clients) as they develop and exhibit their handcrafted products. However, extensive lockdown measures have deprived microentrepreneurs of market access. To adapt to this new environment, MFW has provided its clients with an online marketplace to sell their products and thus sustain their businesses. The institution has also launched many education initiatives, with the MFW Learning Academy providing in-house training to staff and customers alike. The academy offers online courses, with 24,000 MFW clients receiving financial literacy training and 7,000 beneficiaries enrolling in entrepreneurship training. Furthermore, clients have had access to medical consultations from physicians via video and phone calls.
Thanks to these transformations, the institution remains very well positioned in Jordan and will continue its diligent digitalization efforts as it aims to offer more inclusive solutions, add more payment channels, and to be more efficient and responsive to the needs of beneficiaries while providing the best possible prices and services.
Working with like-minded social financial institutions has helped MFW to secure its funding needs and to deliver on its social promises. Symbiotics, a Swiss organization with 15 years of experience in impact investing, has been providing debt financing to MFW since the beginning of their partnership in 2009 and has been actively supporting its investees during the pandemic.
MFW has received 31 local and international awards recognizing its achievements in the microfinance sector, including an excellence in leadership award from Women’s World Banking in 2013 and the Citi award for small businesses in 2019. In 2021 the institution was also selected among the top 250 impact leaders worldwide to receive the Mahatma International Award for Social Good.
